EC's Euro Chips Act set to safeguard microprocessor supplies

The European Commission has proposed a comprehensive set of measures to ensure the EU's security of supply of semiconductors technologies and applications.

The European Chips Act will bolster Europe's competitiveness and resilience, says the EC, by ensuring it has the necessary tools, skills and technological capabilities to secure its supply of semiconductors and to reduce its dependencies.

Its main components are:

• Chips for Europe Initiative. This will pool resources from member states and third-party countries associated with the existing Union programmes, as well as the private sector, €11 billion will be made available to strengthen existing research, development and innovation, to ensure the deployment of advanced semi-conductor tools, pilot lines for prototyping, testing and experimentation of new devices for innovative real-life applications, to train staff and to develop an in-depth understanding of the semi-conductor ecosystem and value chain.
• Framework to ensure security of supply. This will work by attracting investment and enhanced production capacities, to boost innovation in energy efficient chips. A Chips Fund will facilitate access to finance for start-ups to help them mature their innovations and attract investors. 
• Monitoring. Coordination between member states and the EC will underpin monitoring of the supply of semiconductors, estimating demand and anticipating shortages. It will do this by gathering intelligence from companies to map weaknesses and bottlenecks. 

Semiconductor manufacturing and the supply chain

Over the past two years, the global semiconductor supply chain has been shaken by the COVID-19 pandemic, the Suez Canal obstruction, Russia’s invasion of Ukraine, extreme weather events in China and Taiwan. 

Manufacturers want to recover pre-pandemic levels of supply to meet consumer demands, and for those based in Europe, domestic production is one route to do this. 

The European Chips Act aims to:

• Embolden Europe’s research and technology leadership towards more efficient chips
• Build framework to increase production capacity to 20% of the global market by 2030
• Reinforce capacity to innovate in the manufacturing 
• Develop an understanding of the semiconductor supply chain
• Encourage new manufacturing talent 

The suggested legislation has been approved by The European Parliament, and local governments are ready to study the Act and its projected impact more closely. 

Commission President Ursula von der Leyen said: “The European Chips Act will be a game changer for the global competitiveness of Europe's single market. In the short term, it will increase our resilience to future crises, by enabling us to anticipate and avoid supply chain disruptions.

"And in the mid-term, it will help make Europe an industrial leader in this strategic branch. With the European Chips Act, we are putting out the investments and the strategy. But the key to our success lies in Europe's innovators, our world-class researchers, in the people who have made our continent prosper through the decades.”